- Tesla reached four consecutive quarters of profitability, which means it is now eligible for the S&P 500 index.
- Wedbush Securities executive Dan Ives says a $2,000 bull case for the carmaker is now likely.
- China is considered as a constant catalyst for the stock in the upcoming months.
In the second quarter of 2020, Tesla secured a net income of $104 million – marking the first four continuous quarters of profitability in the company’s history. Now, it is eligible for consideration to be placed on the S&P 500 index.
According to Dan Ives, an executive at Wedbush Securities, Tesla is on track to reach $2,000 per share.
Analysts say a confluence of three factors could catalyze the Tesla stock until the year’s end. They are the firm’s profitability in China, eligibility for the S&P 500 index, and high revenues.
S&P 500 Eligibility, Robust Financials, And High Profits Set Tesla Strongly For 2021
In the official Q2 2020 financial results, Tesla said its operating margin neared 5% in the last 12 months.
Over time, Tesla said it expects the firm’s profitability to reach industry-leading levels. The company said:
Our profit improved sequentially due to fundamental operational improvements… For the trailing 12 months, our GAAP operating margin reached nearly 5%. We expect our operating margin will continue to grow over time, ultimately reaching industry-leading levels.
In the near-term, it also sets Tesla to be included in the S&P 500. There are five essential requirements to be included in the index:
- U.S. company
- A market cap of $5.3 billion or higher
- The public owns 50% of shares minimum
- Profitability over four recent consecutive quarters
- Active market
Tesla now meets all five requirements, with the latest quarterly financial results marking four consecutive profitable quarters.
Ives described the performance of Tesla in recent months as a…